MasterCard 2015 Annual Report Download - page 41

Download and view the complete annual report

Please find page 41 of the 2015 MasterCard annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 102

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102

35
3. Transaction processing fees: Transaction processing fees are charged for both domestic and cross-border
transactions and are primarily based on the number of transactions. Transaction processing fees include charges
for the following:
• Switching fees for the following products and services:
Authorization is the process by which a transaction is routed to the issuer for approval. In certain
circumstances such as when the issuer’s systems are unavailable or cannot be contacted,
MasterCard or others, on behalf of the issuer approve in accordance with either the issuer’s
instructions or applicable rules (also known as “stand-in”).
Clearing is the exchange of financial transaction information between issuers and acquirers after
a transaction has been successfully conducted at the point of interaction. MasterCard clears
transactions among customers through our central and regional processing systems.
Settlement is facilitating the exchange of funds between parties.
• Connectivity fees are charged to issuers and acquirers for network access, equipment and the transmission
of authorization and settlement messages. These fees are based on the size of the data being transmitted
through and the number of connections to the Company’s network.
• Other Processing fees: We extend our processing capabilities in the payment value chain for issuer and
acquirer solutions; payment gateways for e-commerce merchants; and mobile gateways for mobile
initiated transactions.
4. Other revenues: Other revenues consist of other payment-related products and services and are primarily
associated with the following:
• Consulting, data analytic and research fees are primarily generated by MasterCard Advisors, the Company’s
professional advisory services group.
• Safety and security services fees are for products and services we offer to prevent, detect and respond to
fraud and to ensure the safety of transactions made on MasterCard products. We work with issuers,
merchants and governments to help deploy standards for safe and secure transactions for the global
payments system.
• Loyalty and rewards solutions fees are charged to issuers for benefits provided directly to consumers with
MasterCard-branded cards, such as access to a global airline lounge network, global and local concierge
services, individual insurance coverages, emergency card replacement, emergency cash advance services
and a 24-hour cardholder service center. For merchants, we provide targeted offers and rewards campaigns
and management services for publishing offers, as well as opportunities for holders of co-brand or loyalty
cards and rewards program members to obtain rewards points faster.
• Program management services provided to prepaid card issuers consist of foreign exchange margin,
commissions, load fees, and ATM withdrawal fees paid by cardholders on the sale and encashment of
prepaid cards.
• The Company also charges for a variety of other payment-related products and services, including account
and transaction enhancement services, rules compliance and publications.
5. Rebates and incentives (contra-revenue): Rebates and incentives are provided to certain MasterCard customers
and are recorded as contra-revenue.
Revenue Analysis
Gross revenue in 2015 and 2014 increased $903 million and $1.5 billion, or 7% and 13%, versus 2014 and 2013, respectively,
primarily driven by an increase in dollar volume of activity and number of transactions on cards carrying our brands, as well as
growth in our Advisors business, which includes the impact of our newly acquired data analytics business. This was partially
offset by the negative impact from foreign currency translation and the local foreign currency from billing. Rebates and incentives
in 2015 and 2014 increased $677 million and $327 million, or 20% and 11%, versus 2014 and 2013, respectively, due to the impact
from new and renewed agreements and increased volumes, partially offset by the positive impact of foreign currency translation.
Our net revenue in 2015 and 2014 increased 2% and 14% versus 2014 and 2013, respectively. Acquisitions contributed 2
percentage points to net revenue growth in both 2015 and 2014, while foreign currency translation decreased net revenue growth
by 6 percentage points and 1 percentage point in 2015 and 2014, respectively.